Under the Finfluence: What Do Australian Regulators Think?

Under the Finfluence: What Do Australian Regulators Think?

Under the Finfluence: What Do Australian Regulators Think?

Compliance and enforcement priorities for two of Australian regulators, ASIC and ACCC, are now firmly focused on the Digital Economy.

Compliance and enforcement priorities for two of Australian regulators, ASIC and ACCC, are now firmly focused on the Digital Economy. Some might say “it’s about time!”

The regulators will coordinate with each other on many matters including combined financial and non-financial issues, so there is potential to be explaining your actions on two fronts.

What is ASIC doing with Finfluencers?

ASIC started ‘cautioning’ finfluencers in April 2022. Prominent social media influencers attended a briefing about the need for a financial services licence from ASIC in early April 2022. It was invitation only and about 30 turned up, with some commenting vocally on social media that the briefing heralded the end of their business. 

So, what is a Finfluencer, and why is ASIC suddenly so interested?

$99 million dollars lost by Australians in 2021 on scams involving crypto assets (ASIC Commissioner Cathie Armour, March 2022) is why ASIC is interested. That’s just crypto and doesn’t account for other significant losses on financial platforms.

From ASIC’s perspective, a Finfluencer is “a social media influencer who discusses financial products and services online”.

If you wanted to have a technical legal argument, we could look at the meanings of ‘social media’, ‘influencer’, ‘discusses’, ‘financial products and service’. Unfortunately, that is a tortured road and only really necessary if you land in a position where you must defend yourself.

Prevention is better than cure!

What it really comes down to is whether, in the online environment (websites and email lists included) you promote a financial product or financial service.

In Australia, if you are providing financial product advice or arranging for your followers to deal in a financial product, you must hold an Australian Financial Services Licence (AFSL). There is a huge compliance regime around it and its overly complicated. It can also take quite some time to get a licence; its not at all like getting a diver’s licence.  


Financial product advice is a recommendation or statement of opinion which is intended to influence, or which could reasonably be regarded as being intended to influence, a person making a decision in relation to financial products.

ASIC Info Sheet 269, March 2022

Earning an income from discussing financial stuff online “indicates an intention to influence the audience”, according to ASIC.  

So, a Finfluencer is someone making money from discussing financial stuff online. If what you say is purely factual – “property investment and on market trading are the most common forms of investment in Australia”, then you are ok.

If you say something like “you get way better returns on crypto than shares” alongside promotion of a crypto trading platform, then you are likely to get into trouble. Especially if you are earning revenue from the promotion of the crypto trading platform.

According to ASIC, dealing in a financial product can be as simple as posting a unique affiliate link for a trading platform.

Understanding What Finfluencers Can and Can’t Do Online

Penalties from ASIC for providing financial advice online without an AFS licence can reach 5 years in jail for an individual and more than $1 million in fines.

If you’re worried about what you are publishing, including historical posts, and whether that might put you in the line to be part of the ASIC Finfluencer crackdown, make an appointment  with us to help identify your real risks and whether continuing to operate your business is realistic, or not.

There may be strategies you can implement (and rules to follow) so that you sit outside those needing an AFSL, including becoming a representative for an AFSL holder.

What’s the Risk of Prosecution by ASIC for a Finfluencer?

Part of the recent awareness campaign is to ensure the ASIC will hear about problems now that more people are aware of their concerns. You might not get a complaint from one of your followers, but in our experience, regulatory complaints are often generated by your competitors rather that your customers.

“ASIC takes enforcement action where it is in the public interest”

Right now, ASIC is likely to be focused on finding someone to prosecute and make an example of to warn Finfluencers of the consequences of non-compliance. It also helps them encourage industry compliance.

ASIC takes enforcement action where it is in public interest. If you’re not already known by ASIC, don’t have much of a following or haven’t been complained about, ASIC probably doesn’t know you exist.


  • you have a huge following, or
  • enough people complain about losing money as a result of interacting with you, or
  • you are already on ASIC’s radar (due to past behaviour), or
  • they’ve come up with an algorithm to find you on social media without human eyes having to complete all the searches,

you’re unlikely to get any attention from the regulator in the immediate future. ASIC only has so much funding.

And then there is ACCC and consumer protection laws…

Digital Marketing is one of ACCC’s 2022/23 Priorities 

The digital economy is now front and centre with ACCC adopting a focus on:

  • Consumer and fair-trading issues relating to manipulative or deceptive advertising and marketing practices in the digital economy.
  • Competition and consumer issues relating to digital platforms.
  • Promoting competition and investigating allegations of anti-competitive conduct in the financial services sector, with a focus on payment services.

So Finfluencers are potentially in the firing line with both ACCC and ASIC. The regulators will coordinate with each other on many matters including combined financial and non-financial issues.


What’s the Problem with Marketing and Advertising Online?

ACCC is concerned with techniques that are manipulative and generate sales as a result of FOMO (fear of missing out). Techniques of concern include:

  • false scarcity reminders such as low-stock warnings
  • false sales countdown timers
  • targeted advertising using a consumers’ own data to exploit their individual characteristics
  • pre-selected add-ons (no, I don’t want McAfee with that!), and
  • design interfaces that discourage unsubscribing.

A scarcity reminder is false when you have the stock or capacity to provide services but have chosen to limit the number for sale at a given time for the main reason of creating urgency in purchasers.

It’s that level of pressure experienced by the purchaser that is considered manipulative, and the higher the priced item, the greater the problem in ACCC’s eyes. Intent can be implied rather than stated. So even if you say it wasn’t your intent to be misleading, where the end result is higher sales due to a perception of the buyer that if they don’t buy then, intent may be implied.

The pre-COVID seminar industry provided an excellent example of the type of sales pressure that is a concern for ACCC – that emotional pressure to rush to the back of the room to complete a purchase before you miss out. Where marketing includes emotional triggers (doesn’t it all, at least marketing that works?) and those triggers are considered unfairly manipulative, you may have cause for concern.

ACCC has previously warned that high pressure sales tactics may be considered unconscionable conduct [https://www.accc.gov.au/business/anti-competitive-behaviour/unconscionable-conduct] and if sales commissions are structured around that type of selling, it will only emphasise the risk that the sales tactic will be unconscionable.   

Other practices of concern include manipulation of online reviews and search results – using false testimonials is a specific breach of consumer law – and comparison websites and social media influencers who don’t disclose commercial relationships and paid promotions. As long as it is clear that promotions are paid promotions, an accusation of manipulation could be avoided.

The failure to disclose payment for comment is a red flag because it is thought that the comments are more likely to be misleading to potential customers than they would be if there was a wholly independent review without benefit to the writer or publisher. It is also suggested that if you do have a ‘adv.’ or ‘sponsored’ tag or notice somewhere obvious on the review that customers can better determine how much weight they will give to the writer’s opinion. 

What’s the Risk of Prosecution by ACCC?

ACCC selects companies working in their current priority areas when deciding whether to pursue a matter. Again, ACCC doesn’t have the funding to follow up or prosecute every compliance complaint. They focus on those complaints that they believe will give them a win in court, or a negotiated resolution that can be published, and choose claims where the defendant can serve as an example for the rest of the industry.

Despite having an online portal for collection of complaints, where a complaint is made about a small business, particularly one that does not operate outside state boundaries, it isn’t likely to get picked up by ACCC and the complainant may need to start their own legal action to get a remedy.

ACCC has a range of enforcement remedies to address contraventions including litigation and court enforceable undertakings, which are designed to be proportionate to the conduct and the resulting or potential harm.

Their stated first priority is to “achieve the best possible outcome for the community and to manage risk proportionately”.

The main actions they use are:

  • encouraging compliance through educating and informing consumers and traders
  • enforcement using administrative processes or more formal processes such as court action
  • undertaking market studies
  • coordination with other government agencies.

Regulators are slowly catching up to the way the digital economy works and taking an interest in consumer protection in that space.

Now might be a could time to update your marketing strategies.

    How can Onyx Legal help you?

    If you have any concerns about a proposed campaign, or existing campaigns, and would like a review, make an appointment to discuss that with one of our team.

    Your Quick Legal and Cyber Check on Your Website

    Your Quick Legal and Cyber Check on Your Website

    Your Quick Legal and Cyber Check on Your Website

    Start by completing our quick audit questionnaire to work out what are some legal issues when creating a website. Then read below…

    Domain Name Legal Issues

    Your domain name is like a post office box. You lease it, you don’t own it. Your registrar is like the post office. They will only talk the person who is authorised as the registrant of the domain name. That might not be you!

    If you don’t know where your website is registered – GoDaddy is a commonly known registrant – this could be a problem if you want to sell your online business and cannot transfer the domain name. If you don’t ensure your registration fees are paid regularly, then you could lose your domain name and it is not easy to get them back.

    When agencies first started building websites for businesses, a lot of companies registered the domain names to their agency rather than you, their client. This became a problem for people when their small web designer gave up their business, or their web designer held them to ransom, requiring a payment equivalent to purchase before releasing the domain name.

    We’ve had a prospective client come to us running a business using a specific domain name, and no part of that domain name was protected by trade mark or copyright. For whatever reason, they let their registration lapse. Of course, the domain name was sold to someone else. That someone else happened to be a local competitor to them. They came to use 2 years after the domain name had lapsed and their competitor was using it and asked us to help them get it back. We told them we couldn’t help. There was no basis for them to claim exclusive ownership, it took them two years to take any action and the time, money and effort required to even attempt to get it back was more than they were willing to invest.

    Trade marks are almost the only thing that can give you superior rights to anyone else for registration of a domain name, and even that won’t stop someone using the same domain name in a different industry from using your name. Just try searching ‘Onyx Australia’. We might be the only legal firm with that name, but we are not the only business with that name in the country.


    • Identify your registrar and make sure you have login details
    • Confirm the registrant name (hopefully not a company you since closed – it has happened)
    • Make sure you have auto-renewal and up-to-date payment details in place

    Our team at Onyx Legal can help you find out who the registrant is and make sure you have control over your domain name.

    Hosting & Backup Legal Issues

    All of the information that people can watch and read on your website is stored and then accessed via the internet. You pay a hosting provider to store that content and make sure it is available when people look for it online. If you don’t know who your hosting provider is, who can you talk to if your website is ‘down’ and not visible? You might be working through an agency and contact them.

    There is a lot of factors that can impact your website hosting including whether your website is on a shared server or an individual server. On a shared server, one website with malware can have every website on the server temporarily shut down. If you site is impacted by malware and taken down, it can impact your results in advertising or search results when clients are looking for you. The responsibility for those things may sit with you, or your agency, or your hosting provider. Check your terms and conditions of hosting.

    The type and local of your hosting provider can also impact the speed of data upload to or download from your website. If you don’t have automatic payments set up on your hosting, you might find your website is down and if you don’t know where your website is hosted, any information you collect through your website, like personal data, may be going around the world before it comes to you – which could be an issue in managing your privacy obligations.

    Backups are important in reducing your cyber risks.

    There are lots of products that enable you to backup your website to the server where it is hosted. This might not be effective if you get hit with ransomware. If you have a separate backup on a system that you know works and can be reinstated quickly, then you have a better chance of a quick recovery from a ransomware attack. Always check that your backups work and your site can be quickly reinstated. Backup regularly.

    Like backups, password protection and sensible username application can also make a huge difference in managing the cyber risks to your website and your business.

    The team at Onyx Legal can help you find out who your hosting provider is and how to protect your content.

    Website relationships and the terms and conditions to manage them

    In a high street shop front, everyone is trained in the rules of what is considered appropriate behaviour in stores from a young age, so much so that we take it for granted. Things like – if you break something, you pay for it, if the shop is closed then you can’t come in, you have to pay for what you buy before you leave the store and so on. The common courtesies like don’t disturb other shoppers, if you are asked to leave then leave, and don’t steal are also taken for granted.

    Online, you sometimes need to remind people of the rules. You can also set some rules to control your own online space.  Think about the big sites like eBay, Craigslist, Facebook, and Google. If you don’t follow their rules, they can stop you from using their services and there is almost nothing you can do about it.

    You have the same ability to control how other people access and use your website and the information you provide. Every different interaction available on your website creates a different relationship that you may need to manage through terms and conditions.

    You will normally find a link to terms of use in a website footer. Following that, convention is sensible if you want to argue that your terms and conditions are binding on your website visitors or users.

    We’ve had a client who neglected to have terms and conditions on their website and had to pay a $125,000 claim for defective products because they failed to disclose that they were just the importing agent for the manufacturer and set any contractual terms around their supply.

    If you are working in any sort of industry that is regulated, either by government or a professional organisation, a disclaimer may help limit the risks to your business. Disclaimers can also provide a great opportunity to remind your clients of their responsibilities

    Onyx Legal can help you tailor terms and conditions that fit your business, your industry, and make sense to your customers.

    Legal Issues with Website Content

    What you publish on your website, whether you put it there or someone else did, is your responsibility. If you have been creative with the truth, copied something from someone else, used a form of software that allows you to ‘snip and spin’ other people’s content and publish it as your own (We were horrified! It was so obviously copyright infringement, and the client thought it was perfectly fine because they paid for the software and assumed the developer was doing the right thing around copyright. Wrong! It slowed their website development down a bit) then that’s on your head – no one elses.

    You need to be aware of any regulations applicable to your industry (for example – health services in Australia can’t use testimonials about the health service), stay within the bounds of consumer protection legislation, not infringe the intellectual rights (trademark, copyright etc) of others and protect the privacy of visitors to your website.

    Onyx Legal can help assess your level of compliance, where you might have risks and make some recommendations around improving your website from a legal perspective.

    How can Onyx Legal help you?

    If you scored badly on the website legal and cyber self-audit and would like us to carry out a more comprehensive audit and make some recommendations, make an appointment with the Onyx Legal team now..

    How to Complete a Quick Legal Audit of Your Business

    How to Complete a Quick Legal Audit of Your Business

    How to Complete a Quick Legal Audit of Your Business

    Running your own business can be a juggle. So how do you know if you are putting yourself at risk? Consider doing a quick legal audit of your business to find out whether there are any potential cracks that you may need to fix.

    We’re going to focus on structure, relationships and risk management.

    Start with your Business Structure

    When was the last time you thought about what business structure you have and if it still works for you?

    Many people start small businesses as sole traders and continue that way until something bad happens, like a threat of court action or an unexpectedly large tax bill. Other people set up multiple companies or trusts and then lose track of them. Some people change the style of delivery of their business and then need to review how everything is done.

    Some recent examples for our clients have been:

    • A client selling a business discovered that the business trade mark was registered to a company they had forgotten about. They had moved and hadn’t updated their contact details with the company register. The company had ‘strike- off action in progress’ recorded against it in the register. The quick fix there was to pay outstanding invoices to the register and update contact details.
    • Another client set up a second company in the US and separated its business delivery by area, some under its Australian company and some under the US company. Customers are now able to choose their area before checkout. Taxes had to be accounted for in each different country and in Australia that meant the invoicing had to identify the Australian company and the GST paid, which initially it didn’t. A few technical tweaks in the delivery software fixed the problem.
    • A couple started a business as a hobby as a sole trader under the name of one of them. Twelve months later they came to us asking about asset protection. Initially, it appeared that the structure didn’t need to change because they hadn’t really started generating any income. A little further in the conversation disclosed that one of the partners held shares, an investment property and crypto-currency in their own name and it became clear that a different structure was needed to isolate those assets from any potential risks in the business.

    Audit questions for you

    1. What legal structure do I use for my business? Can I find the documentation?
    2. When was the last time I reviewed that structure?
    3. Are my business contact details up to date with all regulators?
    4. Do I know my business identification number (in Australia it is an ABN)?
    5. Are my invoices correctly set out for compliance purposes?

    Then Think About All Your Business Relationships

    Mind mapping might help you identify all the different types of business relationships you have. Think about your business from the inside out, starting with you and ending with the general public.

    You might have relationships with some or all of the following groups:

    • Business partners
    • Investors
    • Employees
    • Contractors
    • Suppliers
    • Affiliates
    • Sponsors
    • Advertisers
    • Joint venture partners
    • Clients
    • Customers
    • Subscribers
    • General public

    Each different relationship potentially has different risks, obligations and responsibilities, and those things are much easier to keep track of if they are documented.

    Lots of people who come to us have operated their businesses on verbal agreements or exchanges of emails successfully for years. There is nothing wrong with that, but if something goes wrong, your options are likely to be more limited than if you had a written agreement to refer back to when resolving the problem.

    Most people can’t remember what they did a week ago. Don’t expect to be able to remember exactly what was agreed with someone months or years ago.

    Some recent examples for our clients have been:

    • A business break-up. The parties had not documented their relationship or what would happen if the business came to an end. They had a meeting with their accountant to agree on how to close the business, but then one party decided not to follow that plan, and it hadn’t been documented and agreed in writing on the day, so became a dispute. The simple fix would have been to have a shareholder agreement in place within a short time before or after starting their business, whilst relationships were still good, and the parties were able to speak sensibly and logically to each other.
    • Another client had been operating their business without any hassles for years. The nature of their business meant that there was always a sponsor between them and their end customer. For the first time, a sponsor acted as gatekeeper and stopped the supply of products from our client to the end customer based on their assessment of the quality of the product. Each product was developed by our client’s labour, unique to the client, and our client could not be paid if the products were never put in front of their clients. Difficult situation. We prepare terms and conditions of service between our client and their sponsors to ensure that sponsors who behaved in that way would have to pay our client and amount equivalent to their lost income.

    Consider whether you have anything in writing to help you manage all of the relationships in your business. Some examples are as follows:

    Business Partners

    A business partnership works well when both parties are on the ‘same page’. A clear and transparent agreement will help you quickly resolve any potential issues in the future, regardless of the structure you are using to operate.

    Business relationships will be covered to a limited extent in founding documents, like constitutions or trust deeds, but those documents are designed more for setting out the rules of governance of an entity, than managing the relationships of the people involved. For older businesses, governing documents might be completely outdated and no longer compliant with changes in law.

    Types of documents you may already have in place or like to have in place could include a partnership agreement, or a shareholder’s agreement, or a unitholders agreement. If you’re working with someone on a side gig, you might need a contractor’s agreement or a joint venture agreement.


    Whenever you employ someone, you will have certain information you need to collect and compliance obligations you need to meet, before even considering whether you want to create company policies to help guide your workers.

    Consider the following:

    • notices required under regulation (in Australia we are required to give a Fair Work Information Statement to employees before they start work)
    • information that needs to be securely collected and protected, like tax information
    • an employment agreement
    • a position description
    • health and safety information
    • company policies – social media policies and work from home have been important recently

    Also think about any insurances you are legally required to have in place for your employees, in Australia that will be Workcover insurance.


    Engaging a contractor without a written agreement is not an ideal position to be in if something goes wrong. Even if you have a written agreement, sometimes it isn’t sufficiently clear.

    The biggest issue we’ve managed for clients when contractor agreements have gone wrong is clearly identifying the required deliverables and whether they were met or not.

    If you engage a contractor on their terms and cannot measure what was to be delivered by the end of the month before you pay them, then don’t be surprised if you don’t get what you expected. Be clear before you engage a contractor what you want them to deliver, and if you can’t, at least have the ability to set measurable results you expect on a weekly or monthly basis. If you don’t, make sure you can end the agreement at any time without penalty.

    In some industries there are minimum legal requirements for contractor agreements which can include terms of payment including frequency.


    Your clients are an integral part of your business, and it is essential that you have agreements in place with them appropriate to the type of business you operate.

    There is an increasing level of awareness of what happens when you hand over personal information and an expectation that it should be protected. Platforms like Facebook and Google require advertisers to have a privacy policy before they can publish any adds. Most importantly, a privacy policy gives you the opportunity to show you clients how you care for their information. Do you have one? Is it on your website or otherwise easily available to your clients?

    For online businesses, your agreements are usually contained in the terms and conditions you have published on your website or shopping cart.

    If you’re delivering consulting, coaching, mentoring or similar services, you want something documented to ensure you get paid. We usually encourage an element of upfront payment for coaching or consulting services to ensure you don’t deliver services then have to chase to get paid.


    If you have credit arrangements with any of your suppliers, you will be purchasing their goods or services under their contract terms. Often people don’t review those terms until they want to end the services and then check the terms to find out how to make that happen.

    When was the last time you reviewed your supply agreements? Are you happy with your suppliers, and if not, have you told them? It is possible to change the terms of an agreement in writing between the parties, so that your business relationship can continue, but in a way you are satisfied with, rather than being an unhappy customer.


    Audit questions for you

    1. Do we know where our founding/ governing documents the establish our business are kept? When did we last look at them?
    2. How many different business relationships do we have?
    3. Are those relationships documented in agreements?
    4. Do we know where our agreements and contracts are?
    5. Do we have written employment agreements or policies?
    6. Do we have a privacy policy on our website?
    7. Do we have a contract register so we know what agreements we have, with who, who on our team is responsible, when the agreements end and where they are?

    Now Think About Your Risk Management

    Have you thought about what the biggest risks might be for your business? COVID certainly surprised most people. Whilst some businesses were impacted by SARS and thought about adding in ‘pandemic’ as a risk factor in their risk management and business continuity, that was a very limited number of businesses. If you don’t stop occasionally and work out where the risks are to your business, you don’t give yourself the opportunity to lessen the potential impact on your business before they occur.

    Even if you have a written business plan, and a written business continuity plan (a set of actions to be taken when events or circumstances have an adverse impact on the business), if you haven’t reviewed them for some time then they might not be relevant.

    The key to risk management is thinking about what matters most in your business, how that might be threatened, and what you can put in place to reduce the impact of that potential threat happening.

    A great example is considering cyber risk to your business and then having all staff complete training as a result. The training is a way of raising awareness of the potential problems and helping people understand what they can do to reduce the risk. 

    If you have a business plan, that may help you identify the main areas of potential risk to your business. Consider –

    • Financials – processing payments; invoicing; paying employees, contractors, suppliers; tax changes; loss through theft or other means etc
    • People – what would happen if anyone in your team was gone for any reason?
    • Key Resources – physical, intellectual, human, network
    • Offering – competitors, changing environment, legal compliance
    • Key activities – what would impact your ability to deliver your product or service to your clients?

    Once you’ve identified your risks, then consider the likely chance of it happening, and the likely impact, to calculate a risk score. Typically, businesses identify 4-5 levels of risk for likelihood and impact. So, the likelihood might be from ‘rare’ to ‘almost certain’ and the impact might be from ‘minor’ to ‘catastrophic’. For a large proportion of business, if they’d had the chance to do this exercise with knowledge that COVID was coming, would probably have assessed a pandemic as ‘rare’ and ‘catastrophic’. That may have given it a risk rating in the HIGH range and ensured that measures were in place (like the ability to work remotely) before COVID happened.

    Hindsight is a wonderful thing.


    Audit questions for you

    1. Have we ever considered risks to our business?
    2. Do we know whether we have compliance obligations in our industry?
    3. Do we understand risk management?
    4. Do we have a risk register?
    5. Do we have risk mitigation in place for identified risks?
    6. What insurances do we have in place?
    7. Have we scheduled staff training to help identify and manage risks?

    Is it time for a refresh?

    If you’ve read through the audit questions and think it sounds all to hard, consider the future of your business. If at any time you want to apply for finance, look for an investor or sell your business, all these things will need to be sorted out to get the best value.

    If it seems overwhelming, consider working with us to help prioritise what is most important to support your future objectives, and then to work through the process with someone in your team to help you get organised and on top of everything.

    Onyx Legal offers cost effective day rate services to help you get on top of big projects that support the future value of your business. Let us know if you’d like a hand with identifying and understanding your structure, contracts or risk management. Make an appointment now

    How can Onyx Legal help you?

    Book an appointment to talk with one of our team about your business structure and whether it is still the most appropriate structure for what you are doing and what you’d like to achieve.

    Compare Crowdfunding in Australia

    Compare Crowdfunding in Australia

    Compare Crowdfunding in Australia

    Crowd Funding concept with smartphone on white table

    What is crowdfunding?

    Crowdfunding is about enabling other people to support your cause or idea by donating money to you.  Some fundraisers offer perks or rewards in exchange for donations, some don’t.

    Organisations that have deductible gift recipient (DGR) status can provide tax deductible receipts for donations of over $2, provided that no perk or reward is offered in exchange for that donation.

    In Australia there are strict regulations around offering shares or interests in a company as part of a crowdfunding campaign. Only angel investment platforms with financial services licences are able to support this.

    What is the risk?

    As a donor you are warned against giving money to crowdfunding campaigns in case they are a scam. Statistically, most are not scams but genuine efforts by people or organisations to fund particular projects or ongoing activities.

    Australians reported spend $20billion per year on gambling. With those statistics I am constantly surprised that crowdfunding gets such a bad rap. If we could divert even a fraction of gambling revenue into crowdfunding campaigns (same risk) the potential for growth in innovation is huge.

    As a fundraiser, your greatest risk is not grabbing the attention of the public and failing to reach your funding goal. One way to mitigate this is to use crowdfunding platforms that permit flexible campaigns where you receive the funding regardless of whether you reach your target or not.

    Chose a platform that is currently active; you don’t want to put time and effort into a great campaign only for nothing to happen with it. For example, Cleantechfundr doesn’t appear to have any activity since 2014.

    What are the crowdfunding laws in Australia?

    Crowdfunding has worked without government interference or regulation up until now, but in late 2015 the Australian Government had before it draft legislation that would regulate ‘crowd-sourced funding’ (because calling it ‘crowdfunding’ like everyone else would be too sensible).

    Fundraising in a traditional sense is covered by the Corporations Act and the rules are enforced by the Australian Investments and Securities Commission (ASIC).  If your campaign is seen to be promoting a financial product (shares, insurance, mutual fund) then you will have compliance obligations and crowdfunding is probably not your best bet.

    Where you are collecting a donation and offering nothing more than a nominal reward in return, you are unlikely to have to comply with Corporation Act.

    The draft legislation (Corporations Amendment (Crowd-sourced Funding) Bill 2015) proposed that ASIC would have regulatory oversight of crowding in Australia where the fundraising results in the people gaining an interest (shares) in a public company. There was nothing in that draft legislation that affected crowdfunding by proprietary companies, associations or individuals. That Bill has now been shelved (2016).

    Other laws that affect campaigns are consumer protection laws. When you promote what you plan to do with the money, you have to be accurate in what your telling people. If what you say is later found to be misleading and deceptive you may be liable to pay fines as well as refund money.

    You do have to own or have the right to use any content you include in your campaign to avoid infringing intellectual property laws.

    Some states of Australia also require organisations (unless exempt) to obtain a fundraising licence if collecting money for a charitable purpose. These states are:

    •    Western Australia (any amount)
    •    Victoria (>$10,000 per financial year)
    •    Tasmania (for individuals & organisations not incorporated in Tasmania)
    •    South Australia (any amount)
    •    Queensland (any amount)
    •    New South Wales (any amount)
    •    Australian Capital Territory (>$15,000 per year)

    ‘Charitable purpose’ doesn’t appear to cover ‘developing a business or business idea’ but it is worth checking with the appropriate state based regulator to work out whether or not you are covered. A useful resource for this is Fundingcentre.com.au for fundraising legislation and regulations for not-for-profits.

    How do crowdfunding platforms work?

    Crowdfunding platforms usually collect the money before passing it on to the fundraiser, and will only pass it on under certain conditions. Where a fundraiser has listed an all-or-nothing campaign, the people pledging money are often not charged until the campaign has reached the funding goal. With a flexible campaign, funds raised are handed over whether or not the goal is reached.

    Crowdfunding platforms don’t take responsibility for the funds raised. If a fundraiser has offered perks or rewards in exchange for money raised and they don’t deliver, donors have to pursue the fundraiser rather than the crowdfunding platform.

    Why crowdfunding doesn’t always work in Australia

    You can’t enforce a pledge under Australian law. We have a system where there has to be a mutual exchange before a contract can be enforced. The exchange doesn’t have to be for equal value, it just has to occur.

    So, if you are crowdfunding in Australia and you want to be able to collect all of the donations pledged to your campaign, you will usually need to offer and provide something in exchange. This is why a lot of campaigns offer promotional material in exchange for donations.

    Realistically, the cost of enforcing small donations is likely to be prohibitive, so it is still an exercise in trust in hoping that people will meet the promises they have made. For this reason, platforms that do not have a minimum cap for collection of funds offer a lower risk to crowdfund fundraisers. If you are able to collect the funds as soon as the donor has the impulse to buy, you are less likely to lose collections because people change their mind at a later date.

    What can’t I crowdfund?

    Each crowdfunding platform sets out different categories of product or service they won’t allow you to start a campaign for. These usually cover things like illegal activities, adult material, tobacco or alcohol products, financial products, optional medical procedures, gambling and so on.

    Different types of platforms

    Not all crowdfunding platforms support every idea. Some platforms are aimed at creative projects, some social enterprise or charitable projects and a few are designed to connect small investors with start-ups in exchange for an interest in the company. Below is a PDF showing a selection of different types of crowdfunding platforms available in Australia.

    There are a few other platforms promoted as crowdfunding or small investment opportunities (like BrickX and Thinkable) that don’t fit the usual crowdfunding framework are not included.

    Download your Crowdfunding Australia comparison table here – crowdfundingpdf

    How can Onyx Legal help you?

    What Should I Do When a Client Won’t Pay?

    What Should I Do When a Client Won’t Pay?

    What Should I Do When a Client Won’t Pay?

    Any business, whether it is online or otherwise, will inevitably run into a situation where a client refuses to pay a debt owed to your business. How you respond may depend on the amount of the debt, type of debtor and specific regulations in the State or Territory in which you are seeking the money.

    Some people have great difficulty asking for payment, even though they know the money is owed. If this is you, create a process that you can follow, or delegate to someone else to follow, to avoid the emotional hesitation attached to asking for money.

    You might create a fictional admin person in your business with their own alias and email address and use that identity to follow up payment if it is confronting for you to do it by yourself. If you use a system like Xero or MYOB, you should be able to set up automated reminders in that system so you don’t have to do it manually. 

    Although the process varies, the general outline for collecting on money owed is as follows:

    1. Follow up

    A quick, non-judgemental phone call might be your quickest way to get paid. It is possible that someone has simply forgotten to pay your invoice.

    Follow up with a polite reminder within seven days of the overdue date. If you get no response, you can either call to ask about when the debt will be paid, or follow up with a slightly less friendly reminder.

    Keep a record of all communications, whether via email, post or telephone. If reminders and phone calls don’t get a response, persist with a more personal form of communication, like a phone call. 

    2. Letter of Demand

    Whether you are seeking to recover a debt from an individual or from a company, start with a Letter of Demand. The Letter of Demand states that the company or individual has until a certain date to pay the debt. It also explains that failure to pay by that date allows you to initiate legal proceedings to collect the debt (usually without any further notice). The Letter of Demand is the customer’s last chance to pay on the debt, and it shows the court that you attempted to collect the debt before going to court.

    3. Statutory Demand

    If the debtor is a company, a Statutory Demand can be used if the company owes more than $2,000. The Statutory Demand gives the company 21 days to pay. You must make this type of demand to trigger the appointment of a liquidator or administrator to the winding up of the company if the company fails to respond within the 21 days. A Statutory Demand is a specific legal form and if there is no response, means that the company is presumed insolvent. You will need legal help to manage the specific legal requirements of this process. You don’t want to start out and get it wrong. There are very specific rules and time frames involved in that process.

    Once the time limit on a Statutory Demand expires, that demand stays in place until the debt is paid and you can use the failure to respond to start court action to wind up the company. The whole process of getting to hearing of the application costs upwards of $7,000 on average and there is no guarantee that you will recover the funds you owed on top of that cost. So think carefully before starting this process.

    4. Going to Court

    If the customer does not respond to your demand letters, then the next step is to initiate legal proceedings. These proceedings vary a great deal depending on the type of debt and the debtor. Please contact us to discuss you situation.

    5. Collecting on a Judgement

    If you have won in court, you probably won’t just get paid. You are more likely to need to take steps to enforce your judgement. So, where the Court has made an order that the other party pay you an amount of money within a certain time frame and they don’t, you have to go back to the Court to take further steps to make them pay.

    Your customer might be ordered to attend court and explain their financial situation and why they haven’t paid.  It is possible to get an order that a sheriff seize your customer’s property and sell it to pay you, although this is uncommon.  The court could also issue an order where the customer’s funds (including wages) are garnished and given to you instead—this includes accounts payable if the customer is a company.


    How can Onyx Legal help you?

    For debt recovery we usually recommend the ‘CollectMore App’, which you can purchase for around $6.99 on iOS or Android. That App includes processes for debt recovery and a series of templates all written by a debt recovery expert whom we know and respect.
    We don’t profit from this recommendation, we simply believe it provides you with an inexpensive option that is immediately available.
    If you don’t want to do it yourself, we can also review your circumstances and write a specific letter of demand and follow up the debtor on your behalf.